The Microsoft-netbook controversy explained

The Microsoft-netbook controversy explained

Summary: Microsoft isn't a fan of netbooks. To put it down to one thing, it means they lose revenue in the long run.

SHARE:
48

Microsoft isn't a fan of netbooks. To put it down to one thing, it means they lose revenue in the long run. Netbooks, to those who aren't in the know, are smaller and more compact laptops. Because they're smaller, they have less memory, less computing power and smaller screens.

However, to their merit, they are a brilliant tool to have for students. They're immensely light, easy to use, very handy for taking down lecture notes and the batteries last much longer. The netbook that my parents bought for when they were travelling around the United States has a battery life of around 6-8 hours.

The problem is Microsoft doesn't like the notebook very much, because of the aforementioned reason - it loses them profit. I was talking to resident Microsoft blogger Mary-Jo "Nighthawk Zero Bravo" Foley, and she explained this one in simple layman terms for me, and you, the reader.

Windows XP will be available on notebooks until next year, but by then Windows 7 will be around on the market. OEM's, the companies which provide home and student customers with laptops, computers and netbooks, get charged a fraction of a price for the Windows software they sell on their products.

Vista still costs more than XP, for both consumers and OEM suppliers. But because Vista is so bulky and memory intensive, it can't be installed on netbooks, so XP is used instead. Because of this, the consumer is unaffected as are the OEM's, but Microsoft will lose a cut of money every time due to the cost difference.

The knock-on effect, especially in this economic climate, dictates that more and more people will buy netbooks because of their general awesomeness, and Microsoft's will slide as a result.

Microsoft are going to target Windows 7 Professional Home Premium to netbooks, but this can only be a viable option if Microsoft cuts the cost of the next generation operating system. Hardware prices go down as software prices go up. If you were to buy a brand new netbook at say, $400, you'd find yourself spending nearly that on a retail copy of Windows. So why should OEM's suffer?

Topics: Microsoft, Hardware, Mobility

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

48 comments
Log in or register to join the discussion
  • OEM's won't suffer

    they will just move to another OS like linux. OEM care about THEIR revenues not microsoft's. they rather sell a netbook with linux if that means more profit for them. if microsoft plays it right with windows 7, they can make tons on money even on netbooks. but if they get greedy and try to screw OEMs with high prices for windows 7 it will back fire and market share will continue to bleed.
    blackhawk556
    • Get real ...

      It doesn't cost OEMs any more to put Windows on netbooks than it does to put Linux on them.

      Besides, most consumers will still choose the Windows version they know rather than the Linux version they don't know. Even IF they have to pay more!
      M Wagner
      • Consumers are NOT willing to pay any significant difference for Windows on

        a netbook. That is why MS had to cut the price of XP to the bone for netbooks. They will have to do the same thing for Windows 7. The difference in cost between Windows and Linux is not very significant to OEMs ONLY because Microsoft was forced to almost give away XP.

        How can you not understand something so simple???
        DonnieBoy
        • And where is the problem?

          MS will give low cost OEM licenses for Netbooks, and outsell Linux even though they cost marginally ( I would bet even not so marginally ) more. Just like now.

          I would also guess that for most, a netbook will not be their only computer. They are great for travel or low-power work, but most will need more then that.
          What OS do you think they will choose for their more powerful computer?
          It sounds like a win-win for MS.
          mdemuth
          • Not a problem for consumers, but, because of Linux, Microsoft was forced to

            revive XP for netbooks, and almost give it away. This shows that customers are NOT willing to pay even a little more for Windows on the Netbook platform.

            In case you did not notice, Microsoft took a big hit on Windows revenue because of this.
            DonnieBoy
          • And so did Linux

            as netbooks were to be the "exclusive" domain of Linux cause XP would never sell on a netbook.

            For every Windows netbook sold, that's one less person using Linux.

            Sounds like a loss for Linux, too.
            John Zern
          • Sounds like you do not want to admit that Linux cost MS a fortune here, AND

            Microsoft is being forced into things they really did not want to do.
            DonnieBoy
          • Help for the foolish....

            When less people use Windows thats lost profit for MS. When less people use Linux.....well thats just less people using Linux. There is no real loss.
            storm14k
        • You're forgetting...

          that most OEMs are paid to install trial-ware and crap-ware on their
          systems, which helps offset the cost of the OS. That was worth $50 a
          system for Dell apparently (what they wanted to charge for a crap-ware
          free PC) That money goes away entirely with Linux. Even on a netbook,
          there are probably trial versions of anti-virus and other crap.
          aep528
          • And, yet another reason that people like Linux, less crapware. But,

            crapware is probably coming to Linux sooner or later.

            In any case, MS was forced to drastically reduce the price of the OS for netbooks BECAUSE OF LINUX.
            DonnieBoy
          • But they're getting revenue none the less

            can't say that for a lot of Linux companies out there that rely on support fees to survive.
            John Zern
          • If MS can only depend on OEMs paying for Windows with crapware, Microsoft

            is in trouble. And, this also cost Microsoft a fortune in Windows revenue.
            DonnieBoy
          • Do the math,

            If the crapwarw payment only offsets the OS purchase (which it probably doesn't) then they break even (most likely a net gain) by switching to a free OS.
            storm14k
        • Then why are sales of netbooks

          with WIndows outselling the same model with Linux?

          And why are the return rates for the Linux models 5 times higher?

          How can you not understand something so simple???

          People will NOT pay for something they don't want.

          Simple enough?
          John Zern
          • MS had to drop the price to almost nothing for XP to be viable on the

            netbook platform. That cost them hundreds of millions.

            The high return rates were only for a specific model with a poorly thought out distribution and drivers that did not work.
            DonnieBoy
          • The problem here is....

            ...that first the return rate on Linux models is not 5 times higher. Please provide proof of this. The only manufacturer claiming this was MSI and when asked the CEO of Asus said he was seeing no such thing. MSI apparently sold a very poor implementation of Linux.

            If the sales were that bad and the return rates that high you would have seen Linux taken off these machines long ago and companies like HP wouldn't be investing in their own custom versions. Instead more and more vendors are selling Linux and customizing it.
            storm14k
      • Oh really?

        It costs the same to put Windows and Linux on a netbook?

        I guess that is why MS planned to sell a limited version of Win7 in order to lower the price point for OEM's.

        Anyway thats not the point. Linux is free. So if it costs no more to put Windows on the box then that means MS has to be charging far less for the product which means they won't be making the same profits. Crapware money isn't going to cover the cost of Win7 so MS is going to have a reduction in gains.
        storm14k
      • Again, complete nonsense.

        They don't know Windows 7 from a hole in the ground. Consumers rejected Vista and kept XP because they know XP. The leap from XP to 7 will be at least as great as XP to Vista, so your statement [B]will still choose the Windows version they know rather than the Linux version they don't know[/B] is completely invalid on it's face.

        Now, I can (yuck) take any Linux distro and make it look EXACTLY like XP. I add "Control Panel" to the desktop, use a "Redmond" theme in KDE, remove the virtual desktops, configure Mime types so everything is totally automatic it would look "like an old friend". Learning curve is pretty much zero. That or be confused by 7's totally alien way of working.

        TripleII
        TripleII-21189418044173169409978279405827
    • Can't sell it if people don't want it

      You make it sound as though people want a netbook regardless of what's installed, but sales indicate that's not true..

      Thats like saying everyone would still buy iPods even if all it could play was Latin Dance Music.
      John Zern
      • If that were true, Microsoft would not have had to reduce the price of XP

        But, Microsoft had to cut the price of XP to almost nothing, and it cost them a small fortune.
        DonnieBoy